FinRegLab in the News

Should we trust the credit decisions provided by machine learning models?

“The use of Machine Learning (ML) models is gaining traction in finance due to their better predictive capacity compared to traditional statistical techniques…One of the use cases with greater potential is its application to credit underwriting and scoring, since by having better predictive capacity, ML models allow better estimates of the probability of default and therefore could result in more accurate credit scores. But this improvement in predictive performance does not come without risk.”